Feds paid $40M to firms tied to McCaskill's spouse

Businesses affiliated with the husband of Sen. Claire McCaskill have received almost $40 million in federal subsidies for low-income housing developments during her first five years in office, but McCaskill’s campaign said Tuesday that none of that money made it into the family’s personal bank accounts.

McCaskill’s Republican challenger, Rep. Todd Akin, says the federal payments should be a cause for concern among voters. He’s attempting to portray the Democratic senator’s family as a prime beneficiary of government largesse.

“There is a conflict of interest and a breach of trust with the citizens of our state,” Akin said in an interview with The Associated Press.

McCaskill denied that.

“The accusation is terribly unfair and distorted,” she told the AP on Tuesday. “They are trying to make it appear that somehow my votes enabled my husband to make money — and that’s just not true.”

There is no evidence McCaskill personally routed federal money to her husband’s businesses. She voted for some — and against other — bills that funded the federal housing and agriculture departments, which in turn provide subsidies to businesses with federal contracts to provide low-income housing.

The AP reviewed five years’ worth of federal personal financial disclosure statements filed by McCaskill, which list more than 300 “affordable housing” businesses in which her husband, Joseph Shepard, had at least a partial ownership during the time she has been in office. At least one-third of those businesses also appear to be listed as recipients of federal payments in an online government database that tracks spending.

The firms affiliated with Shepard appear to have received about $39 million from the U.S. Department of Agriculture’s Rural Housing Service or the Department of Housing and Urban Development between 2007 — when McCaskill took office — and the end of 2011.

According to McCaskill’s financial reports, Shepard earned an income of between about $400,000 and $2.6 million from those businesses in the years in which they received government payments. Some of those businesses also rent non-subsidized housing units.

McCaskill said “just a fraction of that income dealt with subsidized housing” and that her husband had only “a passive, minor investment role in” in many of the projects. Later Tuesday, her campaign said the federal subsidies went into a special property account for the low-income units, which under federal regulations can only be used for operations, maintenance and improvements to the housing developments — not redirected as personal profits.

McCaskill’s campaign offered a variety of reasons why the federal payments pose no conflict of interest, including the fact that McCaskill opposed some of the funding bills and that those she supported also included appropriations for a wide variety of government programs.

McCaskill said the vast majority of the housing subsidy contracts were initiated long before she became a senator, although Shepard invested in some of them after she was elected and others were renewed during her term in office. The subsidies cover the gap between the rent paid by the tenant and the value of the housing unit as determined by the federal government. Were Congress to not fund the subsidies, the federal government would be defaulting on its obligations, she said.

“If you really boil this down, it is a small fractional interest in a number of housing projects that had ongoing contracts with the federal government that appropriations bills funded,” McCaskill said. “This isn’t like I had some role in some discretionary decision.”

Akin said McCaskill could have abstained from voting on bills that funded agencies involved in low-income housing developments.

But McCaskill then could have been open to accusations that she shunned her congressional duties — an assertion she has made against Akin for missing numerous House votes during his Senate campaign.

“She has to vote for or against appropriation bills — that’s what the citizens of Missouri hire her to do,” said George Connor, head of the political science department at Missouri State University. But he added: “It seems to me that she has influence over federal policy that has directly benefited her husband.”

“There certainly is a legitimate perception of a conflict of interest, but that’s not the same thing as saying there is one,” Connor said.

McCaskill’s campaign said her position is no different than that of lawmakers who are farmers and vote for agriculture bills that include farm aid, or lawmakers who have family members in the military and vote for bills authorizing defense spending. Her campaign suggested it was a greater conflict for Akin to have supported a federal spending earmark for a highway near his suburban St. Louis home — though Akin’s family received no money to construct it.

McCaskill ranks as one of the wealthiest members in Congress, largely because of her husband’s business success, which was already well-established when she married Shepard in 2002. Her political opponents have long sought to make an issue of their finances.

In the 2004 gubernatorial primary, Democratic Gov. Bob Holden aired an ad accusing Shepard of running dangerous nursing homes that helped finance McCaskill’s campaign. In the 2006 Senate race, Republican Sen. Jim Talent ran an ad accusing Shepard and McCaskill of using an insurance company based in the Bahamas as a tax shelter, which they denied. Last week, Akin began running an ad criticizing about $1 million in housing subsidies financed through the 2009 stimulus act that went to businesses affiliated with Shepard.

Although Akin is just now ramping up his assertions of a conflict of interest, Republican operatives had long planned that as part of their campaign theme against McCaskill. A consulting firm run by former Missouri Republican Party executive director John Hancock built a file on McCaskill’s finances that has been shared in part with the state GOP. Hancock had been a campaign adviser to Republican Senate candidate John Brunner, who finished second to Akin in the Aug. 7 primary.

Akin has campaigned as an opponent of what he describes as an expansive federal government. He said the federal payments to businesses in which McCaskill’s husband has an ownership stake shows McCaskill has “a personal interest in big government — something that benefits herself and her husband.”